Asian School of Business Management

Assignment 1

Cost and Management Accounting

Session 2
Batch 2016 2018
Group Number: 8
Name Registration Number Signature
ARIJIT BRAHMA PGDM/2016-18/09
DIPTANU DEB PGDM/2016-18/15
MANISH G. TIGGA PGDM/2016-18/20
PRAJNASMITA DASH PGDM/2016-18/22
SMRUTI SUDHA BHANJA PGDM/2016-18/34
SUVAM SAHU PGDM/2016-18/43

Guided By
Dr. Padmanva Mohapatra
Presented on
SI. No. Particulars Page Number
 Executive Summary

Stationery items like note books, exercise books, log books, etc. are always in demand for students. The
demand for note books is more in the months of June to August in every year. Similarly, registers are
essential in every office, institutions, organisations, etc. The size of the products will be decided as per
the local market demands.

There is increasing demand for note books as stationery items in view of rapid growth in institutions and
offices of government and commercial establishments. The market is good particularly in tribal areas due
to non-availability.

The manufacturing process of note books, registers, etc. is quite simple. In this process, first of all white
papers are ruled with the help of ruling machine as per the local requirement. The ruled paper sheets are
folded into the required size of note book (92/192 pages) and then after binding it with grey boards,
labels and covers and pasted on it. These labels can also be printed by the entrepreneur in his own unit
and various multi-colour attractive covers can be purchased from the market. After pasting the covers,
cutting is done to give them the finishing touch. The same procedure is followed for making the registers
also.

PRODUCTION 92 PAGES 192 PAGES

CAPACITY
TOTAL CAPACITY (100%) 100000 units 80000 units

The company executed last order at the 50% capacity successfully.

A bulk order came from a high-end customer requiring 80000 units of 92 pages and 64000 units of 192
pages note book for the current year. The company is expected complete current order status successfully.
 Decision / Caselet
DAMPS paper private limited producing plain notebook of two items only. That is of 92 pages and 192
pages.
There is no opening stock at the beginning. Last order was executed at the level of operation of 50%
capacity that is 50000 units of 92 pages and 40000 units of 192 pages of notebook.
Company accepts to supply a bulk order from a high-end customer to supply 80000 units of 92 pages and
64000 units of 192 pages.
Company wants to get profit adjusted by increasing the level of operation to 80% to the sale of next order
at high price.
The desired profit is 20% on combined cost of the current order received.
Company got an offer to submit a quotation for the above order units of notebook
We have to prepare a statement with cost detail to submit before CMD for approval.
Cost associated with last order is given on APPENDIX -I.
Materials will available as per the old rate up to 60% level of production. Additional materials needed 5%
hike is cost. Direct labour is expected to cost 10% more in this order.
Factory overheads are influenced at the combined cost of direct material and labour. Office overheads are
fixed in character up to 100% level of operation.
Selling overhead are expected to decrease 50% because of use of own vehicle instead of hire vehicle.
Company takes only one order per month.
Write a report.

Cost figures per unit of production for the last order are available under -

Rs per Unit
Raw Material 1440000
Direct Labour 39000
Factory Overhead 7162.5
Office Overhead 30000
Selling Overhead 2000
 [APPENDIX 1]
FINANCIAL ASPECTS

A. FIXED C A P I TAL
I. Land and Buildings Rented Rs. 15000 per month

ii. Machinery and Equipment

SI. No. Description Qty. Rate Amount Rs.

1 Disk ruling machine - 36" with motor 1 22000 22000
2 Paper cutting machine - 32" with motor 1 33000 33000
3 Stitching machine with motor 0.5 HP 1 15000 15000
4 Perforating am chine - manual 18" 1 2500 2500
5 Press - manual - 15 x 20" 1 3000 3000
6 Furniture and fixtures 3000
7 Installation and electrification 5000
8 Miscellaneous expenses 2000
Total 85500

B. WORKING CAPITAL

I. Salaries & Wages (per month)

SI. No. Description Nos. Sal/mon. Amount Rs.

1 Manager/Entrepreneur 1 14000 14000

2 Skilled workers 1 13500 13500
3 Semiskilled workers 1 10500 10500
4 Unskilled workers 2 7500 15000
Total 53000

II. Raw Material (per month)

SI. No. Descripti Unit Qty. Rate Amount Rs.

1 White sheets - 44-50 GSM 8 1/2x11 Ream 12000 120 1440000
2 Grey board sheets Sheets 22500 2 45000
3 Printing ink, level cover sheets, 15000
gum, binding cloth thread,
stitching ware, consumables, etc.
Total 1500000

III. Utilities (per month)

SI. No. Description Unit Amount Rs.

1 Power 5000
2 Water 100
Total 5100
IV. Other Expense s (per month)

SI. No Description Amount Rs.

1 Postage, Telephones & Stationery Expenses 500
2 Transportation & Conveyance Expenses 1500
3 Advertisement Expenses 500
4 Repairs and Maintenance Expenses 500
4 Consumable Stores 500
5 Miscellaneous Expenses 500
Total 4000

V. Total Working Capital (per month)

SI. No. Description Amount Rs.

1 Rent 15000
2 Salaries and Wages 53000
3 Raw Material 1500000
4 Utilities 5100
5 Other Expenses 4000
Total 1577100

COST OF PRODUCTION (PER ANNUM)

SI. No. Description Amount Rs.

1 Total Working Capital 18925200
2 Depreciation @ 15% 12825
3 Interest @ 12% 11692
Total 18949717